Weather concerns and the need to attract spring wheat acres means there could be further upside in wheat futures, according to a U.S. analyst.
Although futures are weaker today after trending generally higher over the past few weeks, the Chicago, Kansas and Minneapolis wheat contracts are still well off the lows hit at the beginning of March, said Randy Martinson of Progressive Ag in Fargo, ND.
Martinson said dryness for the winter wheat crop in some parts of the American Plains remains one supportive factor for wheat, while seeding delays for U.S. corn in the Delta and other southern production areas are lending spillover support.
And with spring wheat seeding just around the corner, Martinson said Minneapolis spring wheat could outperform the other wheat markets.
The Minneapolis futures will be working “to secure acres so they don’t go to soybeans,†he said, adding “if they don’t (remain relatively strong) it will take away the incentive to plant spring wheat.â€
While Martinson said he is still generally bullish on wheat, he acknowledged the struggling export market is one factor limiting upside potential. U.S. wheat remains expensive internationally, with the strength in the American dollar part of the reason.
The greenback has come off its nearby highs over the past number of days, but Martinson said it still hasn’t dropped far enough to convince buyers to show more interest in U.S. wheat.
The nearby May Chicago, Kansas City and Minneapolis wheat contracts were all trading between 8 and 9 cents lower this afternoon.
Crop conditions in the U.S. Hard Red Winter wheat belt were actually steady to higher this past week, even though things remain dry overall.
In the primary production state of Kansas, the winter wheat crop was rated 41% good to excellent as of Sunday, unchanged from a week earlier. With temperatures averaging 4 to 8 degrees F above normal across the state, only light precipitation was reported in the southwest and northeast Kansas with amounts up to ¾ of an inch.
To the south in Oklahoma, the condition of the winter wheat crop gained 4 points from the previous week to 44% good to excellent. The improvement came despite the fact the state averaged less than an inch of precipitation last week, with a few scattered showers seen in the South Central and Southeast districts. Significant moisture is still needed in the North Central district for winter wheat development.
As for Texas, the crop there improved to 55% good to excellent as of Sunday, up from 51% a week earlier. Areas of south Texas, and southeast Texas, among others, received the majority of the state’s rainfall, totaling three or more inches the past week. Most other areas observed 1 or more inches of moisture.
As farmers in Rio Grande do Sul wrap up their corn harvest and start on their soybean harvest, they are trying to decide what to do about their winter wheat crop. Unfortunately, the prospects for the 2015 winter wheat crop in the state do not look very good.
According to the president of the Federation of Agricultural and Livestock Cooperatives in Rio Grande do Sul (FecoAgro/RS), the cost of producing the 2015 winter wheat crop in the state is expected to increase 18% thanks largely to the weaker Brazilian currency. Many of the inputs for the crop are priced in dollars and a weaker currency increases the price of imports, especially fertilizers.
Farmers in the state also remember the misfortune they encountered with the 2014 wheat crop. Adverse weather during the growing season and then heavy rains during harvest resulted in a crop that was 42% less than in 2013. Much of the wheat produced in the state in 2014 was of such poor quality that it was used for animal feed instead of human consumption. Even though the 2014 crop was smaller than expected, the post-harvest domestic price of wheat in the state fell to below the minimum price guaranteed by the government.
As a result, the 2015 winter wheat acreage in the state is expected to decline from the 1.15 million hectares planted in 2014. In some regions of the state, the wheat acreage is expected to decline as much as 25%, but it won't be that much of a decline statewide. Unfortunately, farmers in the state do not have many options for a second crop other than small grains.
So with wheat trading at lower levels and costs getting out of control all over the world to grow a crop what farmers plan to grow or grow and crop conditions on certain crops could make for a interesting summer.
The snow event has taken a little shine off our awesome winter. Hopefully it will run off and be gone. But still 40 days till seeding we could see many more storms.
Is wheat the crop to seed?
Although futures are weaker today after trending generally higher over the past few weeks, the Chicago, Kansas and Minneapolis wheat contracts are still well off the lows hit at the beginning of March, said Randy Martinson of Progressive Ag in Fargo, ND.
Martinson said dryness for the winter wheat crop in some parts of the American Plains remains one supportive factor for wheat, while seeding delays for U.S. corn in the Delta and other southern production areas are lending spillover support.
And with spring wheat seeding just around the corner, Martinson said Minneapolis spring wheat could outperform the other wheat markets.
The Minneapolis futures will be working “to secure acres so they don’t go to soybeans,†he said, adding “if they don’t (remain relatively strong) it will take away the incentive to plant spring wheat.â€
While Martinson said he is still generally bullish on wheat, he acknowledged the struggling export market is one factor limiting upside potential. U.S. wheat remains expensive internationally, with the strength in the American dollar part of the reason.
The greenback has come off its nearby highs over the past number of days, but Martinson said it still hasn’t dropped far enough to convince buyers to show more interest in U.S. wheat.
The nearby May Chicago, Kansas City and Minneapolis wheat contracts were all trading between 8 and 9 cents lower this afternoon.
Crop conditions in the U.S. Hard Red Winter wheat belt were actually steady to higher this past week, even though things remain dry overall.
In the primary production state of Kansas, the winter wheat crop was rated 41% good to excellent as of Sunday, unchanged from a week earlier. With temperatures averaging 4 to 8 degrees F above normal across the state, only light precipitation was reported in the southwest and northeast Kansas with amounts up to ¾ of an inch.
To the south in Oklahoma, the condition of the winter wheat crop gained 4 points from the previous week to 44% good to excellent. The improvement came despite the fact the state averaged less than an inch of precipitation last week, with a few scattered showers seen in the South Central and Southeast districts. Significant moisture is still needed in the North Central district for winter wheat development.
As for Texas, the crop there improved to 55% good to excellent as of Sunday, up from 51% a week earlier. Areas of south Texas, and southeast Texas, among others, received the majority of the state’s rainfall, totaling three or more inches the past week. Most other areas observed 1 or more inches of moisture.
As farmers in Rio Grande do Sul wrap up their corn harvest and start on their soybean harvest, they are trying to decide what to do about their winter wheat crop. Unfortunately, the prospects for the 2015 winter wheat crop in the state do not look very good.
According to the president of the Federation of Agricultural and Livestock Cooperatives in Rio Grande do Sul (FecoAgro/RS), the cost of producing the 2015 winter wheat crop in the state is expected to increase 18% thanks largely to the weaker Brazilian currency. Many of the inputs for the crop are priced in dollars and a weaker currency increases the price of imports, especially fertilizers.
Farmers in the state also remember the misfortune they encountered with the 2014 wheat crop. Adverse weather during the growing season and then heavy rains during harvest resulted in a crop that was 42% less than in 2013. Much of the wheat produced in the state in 2014 was of such poor quality that it was used for animal feed instead of human consumption. Even though the 2014 crop was smaller than expected, the post-harvest domestic price of wheat in the state fell to below the minimum price guaranteed by the government.
As a result, the 2015 winter wheat acreage in the state is expected to decline from the 1.15 million hectares planted in 2014. In some regions of the state, the wheat acreage is expected to decline as much as 25%, but it won't be that much of a decline statewide. Unfortunately, farmers in the state do not have many options for a second crop other than small grains.
So with wheat trading at lower levels and costs getting out of control all over the world to grow a crop what farmers plan to grow or grow and crop conditions on certain crops could make for a interesting summer.
The snow event has taken a little shine off our awesome winter. Hopefully it will run off and be gone. But still 40 days till seeding we could see many more storms.
Is wheat the crop to seed?
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